RESPONDENT:Commissioner of Taxes of Vermont
LOCATION:Great Sioux Indian Reservation
DOCKET NO.: 78-1201
DECIDED BY: Burger Court (1975-1981)
LOWER COURT: Vermont Supreme Court
CITATION: 445 US 425 (1980)
ARGUED: Nov 07, 1979
DECIDED: Mar 19, 1980
Jerome R. Hellerstein – on behalf of the Appellant
Richard Johnston King – on behalf of the Appellee
William David Dexter – as amicus curiae
Media for Mobil Oil Corporation v. Commissioner of Taxes of Vermont
Audio Transcription for Opinion Announcement – March 19, 1980 in Mobil Oil Corporation v. Commissioner of Taxes of Vermont
Warren E. Burger:
The judgment and opinion of the Court in United States Parole Commission against Geraghty, 78-572 and a second case, 78-1201, Mobil Oil Corporation against the Commissioner of Taxes of Vermont will each be announced by Mr. Justice Blackmun.
Harry A. Blackmun:
I will take up number 1201 first.
This is Mobil Oil Corporation against the Vermont Tax Commissioner.
The case comes to us by way of appeal from the Supreme Court of Vermont, and Mobile Corporation is organized under New York law and it has its principle place of business and its commercial domicile in that State.
It does business, however, in many other states including Vermont, where it engages in the wholesale and retail marketing of petroleum products.
Vermont imposed a corporate income tax calculated by means of an apportionment formula upon foreign source dividend income received by Mobil from its subsidiaries and affiliates that do business abroad.
Mobil challenged the tax on the grounds that it violated the Due Process Clause of the Fourteenth Amendment and the Commerce Clause.
The state tax, however, was upheld by the Supreme Court of Vermont.
In an opinion filed today, we affirm that judgment and hold that the Vermont tax violates neither the Due Process Clause nor the Commerce Clause.
There is a sufficient nexus in our opinion between Vermont and the appellant to justify the tax and neither the foreign source of the income in question nor the fact that it was received in a form of dividends from subsidiaries and affiliates precludes its taxability.
The appellant failed to establish that the subsidiaries and affiliates engaged in activities unrelated to its sale of petroleum products in Vermont and thus, it has failed to sustain its burden of proving that its foreign source dividends are exempt as a matter of due process from fairly apportioned income taxation by Vermont.
We also hold the tax does not impose a burden on interstate commerce by virtue of its effect relative to Mobil’s income tax liability in states other than Vermont.
Assuming that New York has the authority to impose some tax in the dividend income, there is no reason why that power should be exclusive when the dividends as here reflect income from the unitary business, part of which is conducted in states other than New York, nor does the tax impose a burden on foreign commerce.
Mobil’s argument that the risk of multiple taxation abroad requires allocation of foreign source income to a single domestic site as we conclude is without merit.
I am authorized to state Mr. Justice Stevens has filed a dissenting opinion.
Mr. Justice Stewart and Mr. Justice Marshall took no part in the consideration or decision of this case.